There is no doubt Spotify is a big deal in music, and for a growing number of music fans it has become the only source for their music consumption. I always want to engage and be positive towards new revenue models and technology, while always observing to see if this is the right direction or not.
So, with that in mind, this piece is in two parts: how do we get fans to listen to our music on Spotify? And ultimately, does it pay?
1. How to get fans to listen…
– Include Spotify as a destination for your music on all marketing emails and social networks. If you are on Spotify, you should include it in your marketing strategy, make sure you are linking to your releases when you communicate to your fans.
– Create playlists to encourage fans to discover your catalogue. From new tracks to discovering old catalogue, this is arguably Spotify’s best feature. You can include music from other labels too, to complement your own. Domino’s Best of Indie playlist is a great example of this.
– Build an app. As fellow midemblogger Alison Lamb pointed out here, apps are a great way to present your music and can be ideal for driving discovery. The Blue Note app is one of the coolest I have seen, combining the music with a journey through the label’s history and an education into its fantastic artists. However, building an app can be expensive for small indies, and it will need constant updating. Spotify should definitely make a label tool, for easier app creation.
– Don’t hold back. If you are going to have your music on Spotify, don’t hold it back a few weeks after the iTunes release date. This is entirely pointless. Having studied data on our tracks, the biggest listenership spikes are right on release. So why would you want to miss out on that revenue?
2. Does it pay?
When it comes to Spotify, the revenue stream is complicated, but simply put, a label gets a small payment per stream, then more money based on its popularity within the whole music consumption of Spotify users (full official explanation here). The only problem here is that your track or album may perform admirably in context of an indie release, but those streams will pale into insignificance when placed in competition with major label catalogue, massive top forty tracks, and even seasonal songs, like Christmas songs. If you happen to own the majority of that catalogue, Spotify is going to work out really well for you. If you are brand new artist, or don’t have a big catalogue, it doesn’t seem like a great deal.
Following on from that, the recent figures from Norway show streaming cannibalising sales of music downloads, but growing the whole music market. Great news for the music industry in general, but with the way Spotify pays, I suspect that growth is in the back-catalogue sector. For smaller acts and niche genres, you need to be getting a hell of a lot of streams to make up for lost à-la-carte sales. Over a long time, the amount of streams might pay you more than an iTunes sale, but can you hang around long enough only taking micro-payments? This model also may make it hard for an artist to establish a living wage via streaming, without large front-end investment. Is that going to be good for DIY artists?
Finally, it doesn’t make sense that if someone had Spotify on all their devices and was a premium subscriber, they would still buy that music via download. Spotify’s closing their own download store early 2013 would support this argument. This leads to me to thinking: every time someone who used to buy our music converts into a premium Spotify subscriber, how much economic value to our label (Hospital Records) have we just gained or lost? It’s a really difficult question to answer and probably too early to say. For now we remain on Spotify and are cautiously optimistic about our future on the platform.
Like every music service, Spotify is not perfect. But it licenses music properly, and it pays labels and artists. Thankfully, unlike some other “game changing” new technology based music services, at least artists and labels have a choice whether their music on there or not.